If the supply of unskilled domestic labor and the supply of unskilled immigrant
ID: 1103786 • Letter: I
Question
If the supply of unskilled domestic labor and the supply of unskilled immigrant labor are both perfectly inelastic, then the typical market equilibrium will be such that:
A.
Immigrant labor will replace domestic labor.
B.
The perfectly inelastic supply of unskilled domestic labor will prevent the hiring of any unskilled immigrant labor.
C.
The post-immigration equilibrium will be associated with lower wages being paid to the unskilled immigrants compared to the wages paid to unskilled domestic labor.
D.
Wages paid to unskilled domestic labor will be less under immigration than under no immigration.
E.
Labor demand will shift out with increased immigration.
A.
Immigrant labor will replace domestic labor.
Explanation / Answer
Option D.
If the supply of unskilled domestic labor and the supply of unskilled immigrant labor are both perfectly inelastic, then the typical market equilibrium will be such that wages paid to unskilled domestic labor will be less under immigration than under no immigration.
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